Wisconsin Governor Scott Walker wants 2014 to be a year of discussion about the pros and cons of eliminating Wisconsin’s most progressive revenue sources—the corporate and personal income taxes. But Wisconsinites may not need a full year to see the folly of this approach.
It took mere months for Louisiana and Nebraska to abandon their misguided efforts toward income tax elimination. And the Institute on Taxation and Economic Policy (ITEP) recently found that if Wisconsin were to go this route, the state sales tax rate would need to rise to a whopping (highest in the nation) 13.5 percent if cuts in public investments are to be avoided. Wisconsin taxpayers will likely come to the conclusion rather quickly that nearly tripling their sales tax rate isn’t in their best interest.
In terms of how this sort of shift would affect real Wisconsinites, this post from the Wisconsin Budget Project sums it up: “Governor Walker’s Tax Shift Plan Would Raise Taxes for Most.” In fact, ITEP found that the bottom 80 percent of the income distribution would likely see a net tax hike if the sales tax were raised to offset the huge revenue loss associated with income tax elimination.